Case Information
*1 Before F LAUM , E ASTERBROOK , T INDER , Circuit Judges . F LAUM Circuit Judge
. two companies—Menzies CenterPoint—entered into ten year warehouse near O’Hare Airport. CenterPoint, lessor, owns warehouse; Menzies, lessee, operates air cargo handling business, includes use 15,000 ‐ 30,000 pound forklifts. It did take long these heavy forklifts severely ‐ which machines operated. parties dispute who responsible for fi xing damage, at a cost about $1 million. Under lease, Menzies repairing warehouse’s “ fl oor,” while CenterPoint repairing its “foundation.” Menzies sued. After a bench trial, concluded a ff ected only surface concrete slab—i.e., a ff ected slab’s function a fl oor, not its function as a foundation. Therefore, Menzies entitled recover. We a ffi rm.
I. Background
Aeroground Inc., does business Aviation (“Menzies”), operates air cargo handling business. CenterPoint Properties Trust (“CenterPoint”) a real estate investment trust owns a warehouse near O’Hare Airport. facility single ‐ story structure—a 185,280 square ‐ foot warehouse built 1999, plus large addition built 2007. Another company used building store airplane parts from until 2006. February CenterPoint entered into lease building. After dispute, mutually terminated signed new, ten ‐ year November 2007. Between February November, constructed various improvements building, request, including increasing number dock doors from two thirty ‐ eight installing 45,000 pound dock levelers. These improvements cost about $1.4 million.
When began moving air cargo handling operations into November six inch did exhibit visible damage. By January concrete slab had begun deteriorate. The damage—“cracking, scaling concrete surface, and raveling along contraction joints”—was not consistent typical wear and tear. The slab could not support Menzies’ heavy forklifts, which were typical its field. Menzies told CenterPoint about these problems January 2009. CenterPoint paid for some repairs (at a cost about $92,000), but then stopped doing so. CenterPoint did submit an insurance claim. The parties agree that concrete slab so damaged that it must replaced, at an estimated cost between $966,000 (the cost a new, identical floor) $1.23 million (the cost new floor would permit heavy forklift operation).
As relevant here, Menzies sued CenterPoint for breach, CenterPoint counterclaimed. Both contended other was replacing concrete slab had breached failing replace slab. After bench trial, federal court held neither party was entitled recover. found had “dual nature both foundation,” “the damage issue was related slab’s function floor.” therefore since Menzies “floor”—not CenterPoint’s responsibility, includes “foundation.” However, lost its counterclaim, because required give timely notice if allegedly breached, did do so. Only appeals.
II. Discussion appeal from bench trial, review clear error findings fact applications law
4 13 1956 those findings of fact. Egan Marine Corp. v. Great Am. Ins. Co. of New York , 665 F.3d 800, 811 (7th Cir. 2011). A finding is “clearly erroneous” when, even though there is evidence support it, “the reviewing on entire evidence is left definite firm conviction a mistake has been committed.” Winforge, Inc. v. Coachmen Indus. , 691 F.3d 856, 868 (7th Cir. 2012) (quoting United States v. United States Gypsum Co. , 333 U.S. 364, 395 (1948)). “The party alleging error bears burden of demonstrating particular factual findings were clearly erroneous.” Id. We review de novo court’s interpretation a contract as well conclusion contract ambiguous. BKCAP, LLC v. CAPTEC Franchise Trust 2000 1 , 572 F.3d 353, 358 (7th Cir. 2009). If we find contract ambiguous, then interpretation factual one, reviewed clear error. Wikoff v. Vanderveld , 897 F.2d 232, 238 (7th Cir. 1990).
Where, here, our jurisdiction based diversity, resolution substantive issues determined by applicable state law. LaSalle Nat. Bank v. Serv. Merch. Co. , 827 F.2d 74, 78 (7th Cir. 1987). The agree Illinois law applies. Under Illinois law, interpretation “is governed rules govern contracts.” Midland Mgmt. Co. v. Helgason , Ill. 2d 98, 103 (1994). We therefore apply Illinois principles contract interpretation. goal contract interpretation ascertain parties’ intent, so doing, first look “the plain ordinary meaning” contract language. Gallagher v. Lenart , Ill. 2d (2007). We must construe “as whole, viewing each part light others.” Id. We also must seek give effect “each clause word used,” without rendering terms meaningless. Hufford Balk (1986). more specific provision governs where it arguably conflicts more general provision. Grevas U.S. Fidelity & Guar. Co. (1992).
A. The terms lease
We begin summarizing lease’s terms. The lease does use term “slab” “concrete slab,” nor does define “floor” “foundation.” The lease does state permitted uses warehouse include air cargo handling and storage. Moreover, “agree[d] accept Premises in absolutely ‘as is’ condition,” and did “not make warranties” as premises. defines “Improvements” as existing building and expansion. divides responsibility repairs as follows: 7.1. Tenant’s Obligations. Except as set forth 7.2, Tenant assumes full
and sole condition, operation, repair, alteration, improvement, replacement, maintenance management Premises. … Except as set forth 7.2, Tenant shall, sole cost expense, promptly perform all maintenance promptly make all necessary repairs replacements, ordinary as well as extraordinary, foreseen well unforeseen, Premises equipment now hereafter located Premises, including, limited to, all floors, coverings, windows, glass, plate glass, ceilings, … .
Section 7.2. Landlord’s Obligations. … Landlord shall maintain, repair and replace roof, exterior walls, foundation and structural portions of Improvements … and all exterior portions of Project. … Landlord shall repair and replace exterior walls, roof foundation building part Improvements. cost all repairs replacements under Section … shall be sole Landlord, except extent such costs arise result any act or omission Tenant … .
Section 9.1. Restoration. event Improvements shall damaged or destroyed, whole or part, Landlord covenants agrees that, unless otherwise provided Ground Lease, Landlord shall repair, restore or rebuild such Improvements so damaged, injured partially destroyed, or erect, finish complete like building … . also requires carry several types insurance CenterPoint carry “insurance all Improvements against … all … risks direct physical loss.”
To summarize, 7.1 makes responsible for repairing “all floors,” while (usually) makes CenterPoint repairing “foundation.” also responsible, under 9.1, repairs reconstruction if partially totally damaged. For reasons explained below, agree ambiguous, repairing slab. ‐
B. vs. Section 7.2 The does not specifically define the floor the foundation, nor does it indicate how precisely distinguish between 7.1’s floor repair obligations 7.2’s foundation repair obligations. When we consider the ordinary meaning the relevant terms, foundation means “an underlying base support; especially the whole masonry substructure a building.” M ERRIAM W EBSTER D ICTIONARY O NLINE available at http:// merriam ‐ webster.com/dictionary (last visited December 2013). “Floor” means “the level base a room”; “the part a room which you stand.” Id. court found that the evidence established
that the concrete slab had “dual nature as both floor foundation.” It functioned as because “[t]he slab the surface upon [Menzies’] operations are conducted, including movement cargo loads.” But presented evidence that “the slab also has structural function: connection walls through dowel rods, it bears loads transferred from walls.” found at issue solely concerned “slab’s function floor.” And their pre lawsuit communications, both repeatedly referred ‐ 1956 condition the “floor.” letter to CenterPoint had the heading, “Floor Breaking Up,” multiple vice presidents referred to the “floor” in their emails to CenterPoint. When a is ambiguous, is permissible to consider extrinsic evidence such these pre ‐ lawsuit communications. See Gallagher at 233. Thus, find (which makes CenterPoint repairing the foundation) inapplicable because the meaning the terms in conjunction with the court’s factual findings. parties’ communications further buttress this conclusion. argues the damage was in fact to the
foundation, found otherwise. Multiple engineers testified at trial “foundation elements” were perimeter trench footing set four feet below drilled concrete piers set in ground, supporting columns hold up roof. There no evidence to these foundation elements. As result, determination clearly erroneous on record. next contends brief meant allocate “the top, sides, bottom building.” This contention imprecise, however. outer shell warehouse—the roof, exterior walls, foundation— while Menzies was responsible the inner shell of the warehouse, including the floor ceiling. Menzies’ chosen term, “bottom,” could refer to either the floor the foundation. “Bottom” is in the lease, though, is less precise than the lease’s terms. This argument asks us to overlook the express terms the (and the district court’s factual findings), is therefore unpersuasive. also argues the district court rewrote the by introducing a “functionality” test to determine what was the “floor” what was the “foundation.” There are multiple flaws Menzies’ argument. First, in the district court, suggested the use a functionality test by arguing the concrete failed its “ability provide support.” district court adopted analytical approach, its use was ultimately detriment. Second, the district confronted multiple undefined terms, dictionary definition actually pointed toward functionality because something is “foundation” if provides support. other words, court’s functionality test was means implementing parties’ contract, because parties chose use key term is defined function. Indeed, analytical method has further support when one considers other terms these two sections lease. Specifically, noted above, there parallelism part lease: one party responsible if there damage floor ceiling, while other if there foundation roof. intended, most instances, take care inside building, while outside undergirding building. Since inside could have weight bearing potential (or connected to outside), parties’ division suggested functional analysis.
Menzies argues that concrete failed due to various inadequacies that are “all attributable to CenterPoint.” responds that it made $1.4 million changes warehouse, all at request, but that Menzies failed specify it needed thicker slab—even though Menzies inspected warehouse beforehand knew slab’s thickness. These arguments are really about whether premises were fit heavy air cargo handling operations. The district court addressed issue, it neither before us appeal nor relevant question is. Therefore, we need address these arguments.
C. Section 7.1 vs. Section 9.1 Having concluded Section 7.2 inapplicable, remaining question whether 7.1 9.1 applies. former would make repairs, while latter renders “damage.” found these sections “apparently inconsistent,” reasoned more specific provision (Section 7.1) prevailed over more general one (Section 9.1). Because left responsible, could prevail suit.
We agree with analysis. As noted, more specific provision governs where arguably conflicts more general provision. Grevas 411. As have explained, where one provision general enough include specific situation other confined, “the specific provision will deemed 13 1956 11 qualify more general one, is, to state exception to it.” United Steel, Paper & Forestry, Rubber, Mfg., Energy, Allied Indus. & Serv. Workers Int’l Union v. NLRB , F.3d 859 n.10 (7th Cir. 2008). embraces this principle, but argues Section 9.1 actually more specific provision. This argument unconvincing, however. Section 9.1 refers generally to or destruction. By contrast, Section 7.1 refers to thirty specific parts warehouse maintaining and repairing. Looking to neighboring sections only strengthens reading: whereas Section 9.2 refers generally “total or partial demise” warehouse, 7.2 refers specifically CenterPoint’s maintain and repair roof, exterior walls, and foundation. See Baker Am. ʹ s Mortg. Servicing, Inc. F.3d (7th Cir. 1995) (term in could “be understood only with reference context in appears”) (applying Illinois law). argues should pay “damage” slab, and in making argument, *12 12 13 1956 seeks to draw upon meaning of “damage” in Rickher Home Depot, Inc. , F.3d (7th Cir. 2008). But interpretation would have effect of reading several provisions out of entirely. At minimum, it would render meaningless Sections 7.1 and 34.15, because CenterPoint would need to repair “damage,” even if specifically responsible part of warehouse (like floor). If possible give effect to “each clause and word” of contract, must do so. Hufford , at 172. case, another reading possible, whereby every section retains significant meaning.
Namely, Section 9.1 provides if Improvements are “damaged or destroyed, whole or in part.” 9.2 refers “a total or partial demise,” and makes rebuilding like building. Demise means “die.” M ERRIAM ‐ W EBSTER D ICTIONARY O NLINE available http:// merriam ‐ webster.com/dictionary (last visited December 2013). coupling Sections 9.1 and 9.2 suggests they concern severe damage—the partial or total destruction warehouse (e.g., type damage one associates with tornado), just aspect (e.g., door floor). Admittedly, 9.1 says “damaged or destroyed, whole part .” (emphasis added). We 1956 13 acknowledge that our reading is not the only one possible, it gives effect to parties’ terms sections issue this case, well as to their contract as whole. Our interpretation also accords with precedent preserving independent meaning for each part contract. Under our reading, responsible for damage this case, under Section 7.1; responsible for damage to outer shell building, under 7.2; and also if destroyed severely damaged, under 9.1. (We note that can be severe and partial simultaneously; tornado could tear off roof and lead to significant damage, even though structure remained mostly intact.) next contends that “ambiguous language sufficient to assign away landlord’s responsibility structural repairs.” Under Illinois law, landlords are presumed be “structural” repairs building, and provisions shift such responsibility tenants must plainly discernable. See Kaufman v. Shoe Corp. Am. , App. (1960). found “plainly states default repair replacement responsibility lies tenant,” agree. Cf. Rexam Bev. Can Co. Bolger F.3d (7th Cir. 2010). fact contains certain ambiguities does negate fact plainly shifts repair responsibility Menzies. Under lease, expressly “assumes full sole condition, operation, repair, alteration, improvement, replacement, maintenance management Premises,” subject specific exceptions 7.2. obligations extend “extraordinary” “unforeseen” repairs replacements well. Accordingly, *14 14 13 ‐ 1956 the court’s interpretation is not clearly erroneous on this record.
Menzies also argues that in situations of ambiguity, lease must construed “most strongly” against landlord. NutraSweet Co. v. Am. Nat. Bank & Trust Co. of Chi. , 262 Ill. App. 3d 688, 695 (1994). However, subsequent cases suggest that this “anti drafter” rule of construction is (1) rule of “last resort,” Alberto Culver Co. v. Aon Corp. , 351 App. 123, (2004), (2) has no application where two sophisticated business entities both participated drafting agreement, id. case, parties expressly agreed of that preparing lease “a joint effort parties” resulting should “be construed more severely against one parties than other.” For these reasons, argument unconvincing.
Finally, Menzies contends parties’ insurance whole. Gallagher 233. And 9.2, entitled “Insurance Deductible,” discusses insurance “[i]n event either total partial demise Improvements.” This section informs our reading neighboring provisions supports interpretation suggested above, under responsible for—and insured for—severe damage. Accordingly, we are unpersuaded insurance related contention.
We therefore conclude specific provision makes repairing replacing floor, 7.1, prevails over general provision makes rebuilding if there destruction, 9.1.
III. Conclusion
For foregoing reasons, A FFIRM .
[1] argues slab does function foundation, relies upon trial testimony structural engineer who prepared structural drawings warehouse. This engineer testified trial concrete slab provides no vertical support walls roof thus part foundation. However, he said some cases, this type could provide horizontal support. He was unsure whether did case. Given uncertainty, cannot say factual finding clearly erroneous.
[2] For example, Aeroground’s Senior Vice President, who signed lease, wrote an email CenterPoint: “We have never seen floor break up like this”; “[t]here obviously flaw floor”; “they have never seen degrade manner.” Aeroground’s Regional Vice President similarly wrote email, “we cannot accept your request take costs further repairs floor.”
[3] states relevant part: “Except as set forth in 7.2, Tenant shall, sole cost and expense, promptly perform all maintenance and promptly make all necessary repairs and replacements, ordinary well extraordinary, foreseen as well as unforeseen, and Premises and equipment now hereafter located Premises, including, limited to, all floors, coverings, windows, glass, plate glass, ceilings, skylights, interior and demising walls, doors, electrical systems, lighting fixtures and equipment, plumbing systems and fixture, sprinkler systems, heating, ventilating air conditioning systems, loading docks, areas doors, rail space areas, fences signs, connections, pipes, mains, water, sewer connections, all other fixtures, machinery, apparatus, equipment appurtenances now hereafter belonging to, connected with used conjunction Premises.”
[4] states: “This Lease shall deemed and construed be ‘net lease’ Tenant agrees pay all costs expenses every kind nature whatsoever, ordinary extraordinary, arising out connection ownership, maintenance, repair, replacement, use occupancy Premises during Term Lease, which, except execution delivery hereof, would otherwise have been payable Landlord.”
obligations support interpretation. Menzies notes that, under Article lease, must maintain insurance on all Improvements all risks direct physical loss, while required maintain such insurance, although required have insurance various other risks. As result, claims interpretation “unfairly imposes uninsured risk loss.” See Alliance End Repression City Chi. F.2d 1007, (7th Cir. 1984) (en banc) (“Suppose result reading particular way one assumed enormous risks got nothing return; would argue against reading.”). replies we should read Articles together, sensible because interpret